Despite weak economic growth and low inflation, an interest rate cut and a rating downgrade are not likely, writes Sunita Menon
Despite weak economic growth and low inflation, an interest rate cut and a rating downgrade are not likelyDespite weak economic growth and low inflation in recent months, an interest rate cut this week is not likely — and neither is a downgrade from S&P Global Ratings.
The combination of lower economic growth and inflation that is comfortably within the Bank’s 3%-6% target band will not be enough to spark an interest rate cut, given the Bank’s stated desire to see inflation expectations anchored closer to the 4.5% mid-point of the target band. Inflation rose to the mid-point of the target range in March, following hefty fuel-price increases. The April inflation print is expected to edge up in the wake of the steepest increase at the petrol pumps in four years and a hike in government levies, which took effect at the beginning of May.
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